Correlation Between Bank of America and FPX Nickel
Can any of the company-specific risk be diversified away by investing in both Bank of America and FPX Nickel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and FPX Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and FPX Nickel Corp, you can compare the effects of market volatilities on Bank of America and FPX Nickel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of America with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and FPX Nickel.
Diversification Opportunities for Bank of America and FPX Nickel
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and FPX is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and Bank of America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of America are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of Bank of America i.e., Bank of America and FPX Nickel go up and down completely randomly.
Pair Corralation between Bank of America and FPX Nickel
Considering the 90-day investment horizon Bank of America is expected to generate 0.35 times more return on investment than FPX Nickel. However, Bank of America is 2.87 times less risky than FPX Nickel. It trades about 0.13 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.01 per unit of risk. If you would invest 2,949 in Bank of America on August 25, 2024 and sell it today you would earn a total of 1,751 from holding Bank of America or generate 59.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. FPX Nickel Corp
Performance |
| Timeline |
| Bank of America |
| FPX Nickel Corp |
Bank of America and FPX Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and FPX Nickel
The main advantage of trading using opposite Bank of America and FPX Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, FPX Nickel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FPX Nickel will offset losses from the drop in FPX Nickel's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| FPX Nickel vs. Ascendant Resources | FPX Nickel vs. Cantex Mine Development | FPX Nickel vs. Amarc Resources | FPX Nickel vs. Sterling Metals Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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